Topic #8: Real Estate Financing

Most real estate decisions and transactions are financed using some means of an outside source of capital. Financial leverage measures the degree to which debt is used to finance an investment. When deciding whether or not the use debt to finance a real estate investment decision, it is important to consider the projects return on equity both when leverage is used and when leverage is not used. One should decide to use leverage (debt financing) if investors expect a higher ROE than if they purchased the investment using all cash. This is known as having a favorable or positive leverage. On the other side, investors should not use debt financing if they predict to receive a lower ROE than if they had paid all cash. Below is an interesting website helpful for learning how to make successful real estate decisions:

http://www.getrefm.com/

Topic #7: Overview of Real Estate Finance

Real estate finance interesting subject which can get pretty complex.

Topic #6: Overview of Real Estate Appraisal

There are several ways to value a property through appraisal. they include the: sales comparison approach, cost approach, and income approach. The sales comparison approach establishes a market value of a parcel of land by comparing it to the prices that the market has paid for similar properties in the past. This approach is very common in the residential real estate market. The cost approach values a property by figuring the current cost of reproducing the property and subtracting out depreciation. Depreciation includes physical deterioration, functional obsolescence, and external obsolescence. Functional obsolescence is the inability of the building to provide the same utility or services as the new building where external obsolescence is the loss of value because of external forces and change such as an overpass being built next to a shopping center.

Topic #5: Overview of Real Estate Appraiser

The real estate appraiser position is for the analytical type. These people tend to be less extroverted than the majority of the individuals in the real estate industry. Below is a link explaingint the nine steps it takes to become a real estate appraiser:

http://www.wikihow.com/Become-a-Real-Estate-Appraiser